Bank of America has led a $20 million funding round into U.K. startup Banked, a tie-up that will give customers of e-commerce companies in the U.K. the option to make card-free purchases.
The U.S. lender is teaming up with the fintech to offer a 'Pay by Bank’ solution that will enable users to pay online directly via their bank accounts, streamlining the checkout process and reducing the amount of customer data that vendors need to store. It will also avoid card processing fees.
“When you think about how we as consumers pay for goods online, nothing has really changed for a very, very long time,” Matthew Davies, Bank of America’s head of Global Transaction Services in Europe, the Middle East and Africa, said in a phone interview. “It is offering alternative ways of making payments. So consumers have more choice in how they make payments online.”
Card processing fees have long been a flashpoint between merchants, banks and payment networks such as Mastercard and Visa, the world’s largest. Retailers have long complained about the amount they spend each year to accept electronic payments, a figure that’s grown to more than $100 billion a year in the U.S. as fees increase and consumers flock to premium cards, which carry higher interchange rates — fees charged every time a consumer uses a card.
The issue is a hot topic in the U.K. after Brexit, with both Visa and Mastercard drawing scrutiny for upping certain fees now the U.K. is outside the European Union. Amazon.com recently threatened to stop accepting purchases made with Visa Inc. credit cards issued in the U.K., the latest escalation by the online retailer in its push against transaction fees charged by payment networks.
